News Column

CTPartners Executive Search Inc. Announces Record First Quarter 2014 Financial Results

May 8, 2014

     - Record Net Revenue Grew 37% to $39.9 Million Year Over Year and 16% Sequentially

     - Net Income Per Share of $0.15; Adjusted Net Income Per Share Increases to $0.21

     - Search Assignments Increased 27% Year Over Year and 29% Sequentially

     - Second Quarter 2014 Guidance of Net Revenue of $42 Million to $45 Million and Adjusted EPS in the Range of $0.24 to $0.30

     - Conference Call Tomorrow, Friday, May 9, 2014 at 8:30am ET

NEW YORK--(BUSINESS WIRE)-- CTPartners Executive Search Inc. (NYSE MKT: CTP), a global retained executive search firm, today announced its financial results for the first quarter ended on March 31, 2014.

“We are pleased to report that the strong momentum established in last year’s second half accelerated in the first quarter of 2014. We successfully executed the strategic plan implemented last year, including key hires, acquisitions and cost cutting initiatives leading to strong increases in new search assignments, productivity and revenue per search, all core metrics of our business. This enabled us to achieve record revenue of almost $40 million and $0.21 cents of adjusted earnings per share, nearly matching the level reported for all of 2013,” said Brian Sullivan, Chief Executive Officer. “As we enter the traditionally strong second quarter and progress through the year we anticipate our investments in adding high quality talent and acquisitions across the globe in growing practice areas, such as industrial, energy and professional services will further contribute to the increased financial results we expect in 2014 and beyond,” concluded Mr. Sullivan.

First Quarter 2014 Results

Net revenue for the first quarter was $39.9 million, a record high for the Company, and represented a 36.6% increase compared to $29.2 million in the prior year’s first quarter. Compared to last year’s first quarter, North America revenue increased 35.8% to $23.7 million; EMEA was up 58.4% at $10.6 million compared to $6.7 million and Asia Pacific revenue grew 42.8% to $2.5 million compared to $1.7 million. Latin America revenue of $3.2 million was relatively flat compared to the prior year first quarter. On a practice basis, year-over-year, Financial Services improved 78.0% to $12.2 million, Professional Services increased 72.7% to $8.5 million and Industrial grew 33.7% to $4.8 million. Technology Media & Telecom grew 32.1% to $4.5 as Life Sciences increased 6.1% to $6.1 million. Consumer/Retail revenue was $3.8 million compared with $4.7 million in the 2013 first quarter.

Compensation expense, excluding non-operating expenses, was $29.3 million, or 73.5% of revenue, compared to $22.2 million, or 76.0% of revenue, in the first quarter of 2013. General and administrative expenses, excluding non-operating expenses, were $7.8 million, or 19.7% of revenue compared with 25.3% in the first quarter of 2013.

GAAP net income attributable to the Company for the first quarter was $1.2 million, or $0.15 per share, compared to a net loss of $2.0 million, or $0.29 per share loss, for last year’s first quarter. Excluding after-tax non-operating items of $0.04 million and $1.6 million for 2014 and 2013, respectively, adjusted net income was $1.6 million, or $0.21 per share, compared to an adjusted net loss of $0.4 million, or $0.05 per share, in the prior year’s first quarter. A reconciliation of non-GAAP measures is included in this news release.

Adjusted operating income was $2.6 million in the first quarter compared to an adjusted operating loss of $0.4 million in the year-ago first quarter. Adjusted operating margin was 6.6% in the first quarter compared to negative 1.5% in the 2013 first quarter. Adjusted EBITDA was $3.2 million in the 2014 first quarter compared to a loss of $0.02 million in the year-ago first quarter. Adjusted EBITDA margin was 8.0% and negative 0.1% in the 2014 and 2013 first quarters, respectively.

Performance Metrics - First Quarter 2014

  • The Company was engaged in 441 new search assignments, a 27% increase compared to 348 in the year-ago quarter.
  • The number of placements was 279 compared with 231 in last year’s comparable quarter. The placement rate for this year’s first quarter was 83%.
  • CTPartners had 136 consultants in the first quarter compared with 107 consultants in 2013. The net revenue per consultant was $1.2 million.
  • Average revenue per search was up 13% at $102,200 compared to $90,300 in the year-ago quarter.
  • The Company’s voluntary turnover was three consultants in the first quarter of 2014, allowing CTPartners to maintain one of the lowest turnover rate in the executive search industry.
  • The number of clients representing repeat business was 71% in the first quarter compared with 72% in last year’s first quarter and 79% in the 2013 fourth quarter.

    Guidance

    For the second quarter ending June 30, 2014, the Company expects to report net revenue in the range of $42 million to $45 million and adjusted EPS between $0.24 to $0.30, excluding non-operating items.

    Conference Call

    The Company will host a conference call and webcast for the investment community on Friday, May 9, 2014 at 8:30 AM ET. Investors within the United States interested in participating are invited to call 800-299-9630 and reference the Participant Passcode: 18931065. All other international participants can use the dial-in number 617-786-2904, using the same Participant Passcode. A replay of the event will be available for one month following the conclusion of the call. To access the replay, callers in the United States can call 888-286-8010 and reference the Replay Access Code: 65298019. International callers can dial 617-801-6888, using the same Replay Access Code. To access the webcast, please visit http://investor.ctnet.com.

    About CTPartners

    CTPartners is a leading performance-driven executive search firm serving clients across the globe. Committed to a philosophy of partnering with its clients, CTPartners offers a proven record in C-Suite, senior executive, and board searches, as well as expertise serving private equity and venture capital firms. With origins dating back to 1980, CTPartners serves clients with a global organization of more than 400 professionals and employees, offering expertise in board advisory services and executive recruiting services in the financial services, life sciences, industrial, professional services, retail and consumer, and technology, media and telecom industries. Headquartered in New York, CTPartners has 29 offices in 18 countries.

    www.ctnet.com

    Safe Harbor Statement

    The following is a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release includes forward-looking statements. As a general matter, forward-looking statements reflect our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be identified by the use of forward looking terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words, but the absence of these words does not necessarily mean that a statement is not forward-looking. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for the disclosure of forward-looking statements.

    The forward-looking statements contained in this press release are based upon our historical performance, current plans, estimates, expectations and other factors we believe are appropriate under the circumstances. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved since these forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. Some of the key uncertainties and factors that could affect our future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements are: our expectations regarding our revenues, expenses and operations and our ability to sustain profitability; our ability to recruit and retain qualified executive search consultants to staff our operations appropriately; our ability to expand our customer base and relationships, especially given the off-limit arrangements we are required to enter into with certain of our clients; further declines in the global economy and our ability to execute successfully through business cycles; our anticipated cash needs; projected cost savings as a result of reorganization; our ability to amend certain provisions of previously executed purchase agreements; our anticipated growth strategies and sources of new revenues; unanticipated trends and challenges in our business and the markets in which we operate; social or political instability in markets where we operate; the impact of foreign currency exchange rate fluctuations; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; and the mix of profit and loss by country in which we operate.

    The above list should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in our annual report on Form 10-K filed on March 12, 2014 . The forward looking statements included in this press release are made only as of the date hereof. We do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission.

    Adjusted Performance Measure, Excluding Non-Operational Charges

    Management evaluates the Company’s performance based on Adjusted net income/(loss), Adjusted operating income, Adjusted net income/(loss) per share, Adjusted operating margin, Adjusted EBITDA and Adjusted EBITDA margin. These measures should not be viewed as substitutes for financial information determined in accordance with GAAP, nor are necessarily comparable to the non-GAAP performance measures that may be presented by other companies. We believe the presentation of these non-GAAP measures provides meaningful supplemental information regarding our performance, excluding certain charges that may not be indicative of our core operating results. We include these non-GAAP measures because we believe they are useful to investors in providing more transparency with respect to operational drivers of the business and the supplemental information used by management in evaluation of our ongoing operations.

    We calculate Adjusted net income/(loss) as Net income/(loss) excluding the following charges which we do not believe are reflective of our operational results:

  • Post-combination compensation expense
  • Reorganization charges
  • Gain or loss on foreign currency related to funding of foreign subsidiaries
  • Fees and expenses incurred by us in connection with the restatement of our 2012 interim financial statements
  • Fees and expenses incurred in connection with acquisitions
  • Tax effect of the above adjustments

    Adjusted operating income is defined as Adjusted net income/(loss) plus interest expense and tax expense/benefit.

    We calculate Adjusted EBITDA as Adjusted Operating Income plus depreciation and amortization expense.

    We calculate Adjusted earnings/(loss) per common share using the weighted average shares outstanding amounts used in the calculation of diluted earnings per share in accordance with GAAP.

    Adjusted operating margin is calculated as Adjusted operating income divided by net revenues for the period. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by net revenues for the period.

               

    CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

     

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

    (in thousands except share and per share amounts)

     
    Three months ended

    March 31,
    2014         2013  
    Revenue
    Net revenue $ 39,870 $ 29,183
    Reimbursable expenses 1,088   800  
    Total revenue 40,958 29,983
    Operating expenses
    Compensation and benefits 29,420 24,067
    General and administrative 8,611 8,280
    Reimbursable expenses 1,209   837  
    Total operating expenses 39,240   33,184  
    Operating income/(loss) 1,718 (3,201 )
    Interest expense, net (49 ) (54 )
    Income/(loss) before income taxes 1,669 (3,255 )
    Income tax (expense)/benefit (641 ) 1,223  
    Net income/(loss) 1,028 (2,032 )
    Net loss attributable to redeemable noncontrolling interest 132    
    Net income/(loss) attributable to the Company $ 1,160   $ (2,032 )
     
    Basic income/(loss) per common share $ 0.16 $ (0.29 )
    Diluted income/(loss) per common share $ 0.15 $ (0.29 )
    Basic weighted average common shares 7,138,477 7,019,237
    Diluted weighted average common shares 7,661,502 7,019,237
           
     

    CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

     

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

    (in thousands except share and per share amounts) Adjusted Performance Measure, Excluding Non-Operational Charges

     
    (in thousands, except per share amounts)
    Three Months Ended March 31
    2014       2013  
    CALCULATION OF "AS ADJUSTED" AND "ADJUSTED EBITDA" PERFORMANCE MEASURE
    Net income/(loss) $ 1,028 $ (2,032 )
    Adjustments:
     
    Post-combination compensation and reorganization expense 1,878
     
    Foreign exchange loss/(gain) on funding of foreign subsidiaries 118 677
     
    Costs incurred for restatement, acquisition and integration 779 212
     
    Tax effect of the adjustments (345 ) (1,089 )
    Adjusted net income $ 1,580   $ (354 )
     
    Interest expense/(income) 49 54
    Tax expense/(benefit) 986   (134 )
    Adjusted operating margin 2,615 (434 )
    Depreciation and amortization 563   414  
    Adjusted EBITDA 3,178   (20 )
     
    Adjusted operating margin 6.6 %

    (1.5)

    %

     
    Adjusted EBITDA margin 8.0 %

    (0.1)

    %

     
    Earnings per common share, as adjusted $ 0.21 $ (0.05 )
     


    Use of non-GAAP measures: The table above contains selected financial information calculated other than in accordance with U.S. Generally Acceptable Accounting Principles (“GAAP”).

                   
     

    CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

     

    CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

    (in thousands, except share and per share amounts)

     

    March 31,

    2014

    December 31,

    2013

    Assets
    Current Assets
    Cash $ 4,579 $ 5,654
    Accounts receivable, net 33,426 26,381
    Other receivables 377 433
    Prepaid expenses 3,852 3,974
    Deferred income taxes 2,914 3,184
    Other 3,648   4,411  
    Total current assets 48,796 44,037
    Non-current assets
    Leasehold improvements and equipment, net 4,570 4,149
    Goodwill 9,727 5,811
    Intangibles, net 4,311 3,746
    Other assets 5,306 5,517
    Deferred income taxes 5,015   5,482  
    $ 77,725   $ 68,742  
    Liabilities and Stockholders’ Equity
    Current Liabilities
    Current portion of long-term debt $ 3,287 $ 4,762
    Line of credit 15,019
    Accounts payable 3,559 3,813
    Accrued compensation 21,488 25,201
    Accrued business taxes 2,417 2,079
    Income taxes payable 267 710
    Accrued expenses 2,512   5,650  
    Total current liabilities 48,549   42,215  
    Long-Term Liabilities
    Long-term debt, less current maturities 2,681 1,216
    Deferred rent, less current maturities 950   1,050  
    Total long-term liabilities 3,631   2,266  
    Redeemable noncontrolling interest 4,120 4,088
    Stockholders’ Equity
    Common stock 8 8
    Additional paid-in capital 37,784 37,778
    Accumulated deficit (13,082 ) (14,242 )
    Accumulated other comprehensive (loss), net of tax (1,189 ) (1,275 )
    Treasury stock (2,096 ) (2,096 )
    Total stockholders' equity 21,425   20,173  
    $ 77,725   $ 68,742  
             
     

    CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

     

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

    (In thousands)

     
    For the Three Months

    Ended March 31,

    2014           2013
    Cash Flows From Operating Activities
    Net income/(loss) $ 1,028 $ (2,032 )
    Adjustments to reconcile net loss to net cash used in operating activities
    Depreciation and amortization 563 414
    Share-based compensation 138 175
    Amortization of discount on seller notes 4 30
    Amortization of post-combination compensation 1,878
    Deferred income taxes 737 (771 )
    Changes in operating assets and liabilities, net of effect of acquired businesses:
    Accounts receivable, net (6,599 ) (1,839 )
    Prepaid expenses 885 215
    Income taxes receivable (533 )
    Other assets and receivables 392 (1,263 )
    Accounts payable (338 ) 1,285
    Accrued compensation (3,889 ) (8,861 )
    Accrued business taxes 334 (156 )
    Income taxes payable (434 ) (233 )
    Accrued expenses (3,303 ) (815 )
    Deferred rent (89 ) (140 )
    Net cash used in operating activities (10,571 ) (12,646 )
    Cash Flows From Investing Activities
    Acquisition of businesses (2,336 )
    Purchase of leasehold improvements and equipment (1,046 )
    Notes receivable issued (428 )
    Repayment of notes receivable 1,000    
    Net cash used in investing activities (2,810 ) (94 )
    Cash Flows From Financing Activities
    Principal payments on long-term debt (2,717 ) (2,665 )
    Net proceeds from line of credit 15,019   5,862  
    Net cash used in financing activities 12,302   3,197  
    Net decrease in cash (1,079 ) (9,543 )
    Effect of foreign currency on cash 4 105
    Cash:
    Beginning 5,654   15,947  
    Ending $ 4,579   $ 6,509  
                                               
     

    CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

    SUPPLEMENTAL PERFORMANCE METRICS

     
     

    REVENUE BY REGION

     
    YEAR OVER YEAR           Q1 2014         Q1 2013                  
    By Region           Revenue       %           Revenue       %           Increase / (Decrease)       %  
    North America           $ 23,666       59.4 %         $ 17,433       59.7 %         $ 6,233         35.8 %
    EMEA             10,585       26.5 %           6,681       22.9 %           3,904         58.4 %
    Asia Pacific             2,458       6.2 %           1,721       5.9 %           737         42.8 %
    Latin America             3,161       7.9 %           3,348       11.5 %          

    (187)

     

          -5.6 %
    TOTAL           $ 39,870       100 %         $ 29,183       100 %         $ 10,687         36.6 %
                                               

    REVENUE BY PRACTICE

     
    YEAR OVER YEAR           Q1 2014         Q1 2013                  
    By Practice           Revenue       %           Revenue       %           Increase / (Decrease)       %  
    Financial Services           $ 12,216       30.6 %         $ 6,863       23.5 %         $ 5,353         78.0 %
    TMT             4,536       11.4 %           3,434       11.8 %           1,102         32.1 %
    Life Sciences             6,052       15.2 %           5,705       19.6 %           347         6.1 %
    Professional Services             8,478       21.3 %           4,910       16.8 %           3,568         72.7 %
    Consumer/Retail             3,771       9.5 %           4,667       16.0 %           (896 )       -19.2 %
    Industrial             4,817       12.1 %           3,604       12.3 %           1,213         33.7 %
    TOTAL           $ 39,870       100 %         $ 29,183       100.00 %         $ 10,687         36.6 %
                                               

    CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

    SUPPLEMENTAL PERFORMANCE METRICS

     

     

    REVENUE BY REGION, SEQUENTIAL

     
    SEQUENTIALLY           Q1 2014         Q4 2013                  
    By Region           Revenue       %           Revenue       %           Increase / (Decrease)       %  
    North America           $ 23,666       59.4 %         $ 20,296       59.1 %         $ 3,370       16.6 %
    EMEA             10,585       26.5 %           8,984       26.2 %           1,601       17.8 %
    Asia Pacific             2,458       6.2 %           2,447       7.1 %           11       0.4 %
    Latin America             3,161       7.9 %           2,593       7.6 %           568       21.9 %
    TOTAL           $ 39,870       100 %         $ 34,320       100 %         $ 5,550       16.2 %
                                                 

    REVENUE BY PRACTICE, SEQUENTIAL

     
    SEQUENTIALLY             Q1 2014         Q4 2013                  
    By Practice             Revenue       %           Revenue       %           Increase / (Decrease)       %  
    Financial Services             $ 12,216       30.6 %         $ 10,180       29.7 %         $ 2,036         20.0 %
    TMT               4,536       11.4 %           4,038       11.8 %           498         12.3 %
    Life Sciences               6,052       15.2 %           5,653       16.4 %           399         7.1 %
    Professional Services               8,478       21.3 %           6,852       20.0 %           1,626         23.7 %
    Consumer/Retail               3,771       9.5 %           4,010       11.7 %           (239 )       -6.0 %
    Industrial               4,817       12.1 %           3,587       10.4 %           1,230         34.3 %
    TOTAL             $ 39,870       100 %         $ 34,320       100 %         $ 5,550         16.2 %
                         

    SUPPLEMENTAL INFORMATION

     
                Three Month Period Ended March 31       Increase / (Decrease)       % Increase / (Decrease)
                  2014         2013                
    # of new search assignments             441         348         93       26.7 %
    # of executive search consultants             136         107         29       27.1 %
    Productivity           $ 1,208,000       $ 1,101,000       $ 107,000       9.7 %
    Avg. revenue per executive search           $ 102,200       $ 90,300       $ 11,900       13.2 %





    CTPartners

    William J. Keneally, 216-682-3103

    Chief Financial Officer

    wkeneally@ctnet.com

    or

    EVC Group

    Michael Polyviou, 212-850-6020

    Robert Jones, 646-201-5447

    Investor Relations

    mpolyviou@evcgroup.com








    Source: CTPartners Executive Search Inc.


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